This action might not be possible to undo. Are you sure you want to continue?
Fall, 2004 R. Congleton
Instructor Office Roger D. Congleton 11 Carow Hall Phone: 993 2328 office E-mail: Congleto@gmu.edu Website: RDC1.net
Office Hours: Wednesday: 2:00 - 3:30, Thursday 2:00 - 3:30 and by appointment Main Texts and References:
De La Fuente, A. (1999) Mathematical Methods and Models for Economists. New York: Cambridge Univ Press (Paper Edition, Trd); ISBN: 0521585295 Hirschliefer, J. (2001) The Dark Side of the Force: Economic Foundations of Conflict Theory Cambridge: Cambridge University Press, 2001, 366 pp (paper). Class Notes, distributed weekly in class. (PDF versions of the class notes are also available at http://rdc1.net/class/MathEcon/index.htm)
Optional Text and References:
Dixit, A. K. and Nalebuff, B. J. (1993) Thinking Strategically : The Competitive Edge in Business, Politics, and Everyday Life. New York: W.W. Norton & Company; ISBN: 0393310353 Debreu, Gerard (1975) Theory of Value New Haven: Yale University Press. (paper)
Other Useful Texts:
Mas-Colell, A., Whinston, M. D., and Green, J. R. (1995) MicroEconomic Theory. New York: Oxford University Press. Varian, Hal R. Microeconomic Analysis 3rd Ed. New York: W. W. Norton and Co., 1992. ISBN 0 393 95735 7. Chiang, A. C., Fundamental Methods of Mathematical Economics, 3rd Edition, New York: McGraw Hill, 1984. ISBN 0 07 01081307 Chiang, A. C., Elements of Dynamic Optimization, McGraw Hill, 1992.
The purpose of this course is to introduce the students to "model building" as practiced by the economics profession and rational choice strands of political science and sociology. To this end, students are introduced to the mathematical tools and concepts that are most frequently used in economic models of the firm and consumer behavior. The course focuses on mathematical representations of optimizing individuals in a wide variety of "choice settings." The methods
EC630 Page 1
Kuhn -Tucker method. homothetic functions.V7. chain rule. TENTATIVE COURSE OUTLINE Date 9/2 Topic I. continuity. Mathematical Concepts: weak ordering. convexity.2 1.10) LF: 7. first and second order conditions. the term paper requires students to analyze a choice setting or economic problem of their own design using the tools developed in class.2 -3 9/16 III. H:Int-1.1 EC630 Page 2 . and other choice settings in politics and law. 1. Derivatives and Optimization Mathematical Concepts: partial derivative. successfully mastering the material means that the student should be able to apply the mathematical tools and concepts to model settings beyond those explicitly covered in class.2. 3.5 (See also C12. Arrow-Enthoven Sufficiency Theorem Economic Applications: Consumer Theory.developed can be used to analyze traditional economic decisions by firms and consumers. The textbooks also serve as a reference library for those interested in making contributions to economic theory or in better understanding published work in the leading economic journals. Economic Applications: consumer theory. The course is lecture and note based. objective function. 2. continuity. neighborhood. the theory of the firm Problems: Handout. 3. Social Welfare Functions Problems: Handout. Allocating Scarce Resources: Constrained Optimization Mathematical Concepts: Lagrangian multipliers. As in any mathematics or economics course. substitution method. C12.2. The textbooks provide additional material and explanations that may help students better understand the concepts and tools developed in class. Economic Applications: the profit maximizing firm.1. All of the core material is covered in class and in the lecture handouts. 7. V1. cost-benefit analysis Problems: Handout. 6.3.1 9/23 IV. 1. LF: 5. V: 7. quasi-concavity. 3. Comparative Staics in Abstract Models:The Implicit Function Theorem Mathematical Concepts: derivatives of implicit functions. V3.4. functions.2.1-4. M1) Chapter Readings 9/09 II. The models can be used to analyze decision making in any setting in which individuals have reasonably clear goals (objective functions) and confront reasonably clear constraints. Introduction: The Mathematical Analysis of Rational Choice LF: 1.1 (See also C9.1.5 1. constraints. concavity. 4.21.4-8.11 (See also C12. 7.4. duality. V27 ) LF: 4.1.5. Usefulness and limitations of deductive methodology. 14 Scope of Course.3. 7. Kuhn Tucker Sufficiency Theorem. Lagrangian method.6. C12. compact sets. For example. V9.
11 (See also C6. V 5. 2001:724-730. H:8 EC630 Page 3 .2. upper semicontinuity.2 1.6 2 .4. AER. More on Decision Making under Uncertainty Mathematical Concepts: Probability Density Function.7.6.3 (See also C8. Series. Taylor Series.5.3 Mathematical Concepts: weak preference ordering.6 1. 13.2. The Existance of General Equilibrium (short lecture) (study guide handout) LF 6.4 C13.. (See also V17. Risk and Uncertainty. Economic Applications: Intertemporal choice.1. Mme) 9/30 V. 5. Walras' law. 7. C.3 C6. Present Value. V11. definite and indefinite integrals. Economic Growth.1. Stability analysis.7 4 C13. subjective rate of time discounting. 6.5. AER. Applications of the Rational Choice Model To Crime: The Wealth Maximizing Criminal (Becker.Economic Applications: Supply and Demand. Interdependent Decisionmakin in Small Groups: An Introduction to Game Theory LF: 6.4 .9.2 C13.2.) LF 8. Economic Applications: Continuous Discounting.5 1. risk aversion. V11. Browers fixed point theorem. 1977: 255-73) To the selection of a Central Banker (Waller. 1992: 1006-12) To the assignment of liability to lenders (Lewis and Sappington.5 1. M 15-17) 11/11 X. Convergence. JPE 1968: 169-217) To Politics: Tax Revenue Maximizing Leviathan (Buchanan and Brennan.V6.2. V 17 1-6. 11.7.5 4. J. Reaction functions Problems: C8.5. Mmf ) LF: 4.13.4-5. K3:3.6 1.5.6. Debreu 5. Decision making under uncertainty. 5. Kakutani fixed point theorem Economic Application: Walrasian Equilibrium Problems: Handout.3 C8. 11. C6.3. Problems: Handout. 21. 5.3 10/21 10/28 11/04 VIII. Measures of Risk Aversion Problems: Handout. V11. M6 ) 10/14 VII.2. Expected Value.4 10/07 VI. Time and Uncertainty in Economic Choices Mathematical Concepts: Probability Function.4. C13. Limit Point. More Applications and Review for Midterm Midterm Exam Exams returned and Reviewed IX.8 (See also C13. JPubE. 11. Totals from Marginals. V11. excess demand correspondence.1-2. Integrand.
and the courts--also if time permits: contract enforcement. Stackelberg games.7. AER. Existance of Nash equilibrium. More Applications of Non-Cooperative Game Theory Static and dynamic competition. anarchy. 1988: 1133-1137.10. Applications from Hirschliefer and. 14C4. Applications of Non-Cooperative Game Theory Economic Applications: contest success functions. 13B8. 7 11/25 12/02 THANKSGIVING BREAK no class XII. Duopoly. rent-seeking. 6. K8. majority rule cycles Externality Theory. Chapter 25). B11. 15. B7. but oriented toward material covered in second half of the semester) Grades: 70% 2 exams 25% 1 Short Paper using Math-econ tools on a topic of interest 5% Homework (from handouts)/Class Participation Bonus 100% Grades are based on the following set of minimums A >88 B >77% C >66% EC630 Page 4 .) Theory of Anarchy (Skaperdas. also.1. Monopolistic Competition. Kakutani fixed point theorem. Review for Final Study Guide/Class Notes Final Exam: 7:30-10:15 (necessarily comprehensive. B14 (See also V15. M9:B5. 2000: 649-666) Problems M: 13B3. Contract Design and Enforcement: Moral Hazards. V15.) H: 5. coalition formation.2. zero sum game Economic Applications: Reaction (best reply) Functions. Separating and Pooling Equilibria. 13B4. if time permits: R&D in Duopoly (D'Aspermont and Jacquemin.16. AER. 14B1.9.3. Signalling and Screening (Varian.Mathematical Concepts: strategy. 14C8 H11-13 12/09 12/09 12/16 Papers Due XIII. Tragedy of the Commons Problems Handouts: V15.7 (See also V15.2. Problems V15.) Political Influence and Dynamic Consistancy (Garfinkel and Lee. non-cooperative games. 14B3. 1992:720-739. prisoner's dilemma game. 15. AER. payoff. pure and mixed strategies. M7) 11/18 XI. 15.
C:14. second order conditions.4. MIT Press. 11 Matrix as a notational convention. transpose and inverse.6 Problems: C2: 2. growth models LF: 11. singular matrices. control path. C2 1.V19. Harvard Univ Press. 3. Matrix Mechanics LF: 3.1: 1. 4.3: 1. the Euler equations Economic Applications: Optimal Investment and Savings Rules. Weibull. Evolutionary Game Theory Jorgen W. equation of motion. transversality conditions. comparative statics Economic Growth and Stability Mathematical Concepts: first order difference and differential equations.6: 1. functional. Environmental policy LF: 11-13. phase diagram. 14: 2. 2. Cramer's rule. addition and multiplication. 4 Dynamic Optimization Mathematical Concepts: optimal time path. initial state. chaos Economic Applications: price expectations. iterative method. 14.2: 1.16 Problems: C 14.3. C: 4. 3: 14. matrix algebra and optimization.For Additional or Extended Study Consider Read Mas-Collel and or Varian in other areas of interest More Game Theory Roger B. the bordered Hessian and positive definiteness Economic applications: solution to linear demand system.2. 5. 1996.41.6 EC630 Page 5 . Myerson (1997) Game Theory : Analysis of Conflict. dynamic stability. 2. 14.